Courtesy of Pam Martens.
Much of the current dysfunction and corruption on Wall Street has been laid at the feet of the repeal of the depression-era investor protection legislation known as the Glass-Steagall Act, which barred investment banks that underwrote securities from mergers with commercial banks taking insured deposits.
The merger of Citicorp (parent of Citibank) with Travelers Group in 1998 forced the hand of Congress to pass the Gramm-Leach-Bliley Act in 1999, which repealed the barriers imposed by the Glass-Steagall Act.
Committees in both the Senate and House of Representatives have now begun to look beyond the Wall Street carnage of 2008 to the intractable problem of creating jobs in America. There is concern that the framework of Wall Street is creating structural impediments to job creation. Those concerns are very real.
In November 2009, David Weild and Edward Kim authored a study for the accounting firm, Grant Thornton LLP titled “A Wakeup Call for America.” The study made the following startling findings:
Since 1991, the number of U.S. exchange-listed companies is down more than 22 percent, and when adjusted for real GDP growth (inflation-adjusted), that percentage balloons to a startling 53 percent.
360 new listings per year — a number we’ve not approached since 2000 — are required to replace the number of listed companies lost in the U.S. In fact, the U.S. has averaged fewer than 166 IPOs per year since 2001, with only 54 in 2008. (Those numbers do not include listings of funds, ETFs, REITs.)
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